529 plan FAQs: About 529 plan accounts
How do I choose a 529 plan?
Fidelity suggests that families consider the following:
- In-state tax benefits. Some states offer tax benefits to residents contributing to in-state or out-of-state 529 plans.
- Plan management. What financial services company is managing the plan and what types of services does the company offer?
- Investment options. Most 529 plans offer a number of investment options, including age-based portfolios, which invest savings based on a beneficiary's age and the number of years until they will be starting college.
- Fees and expenses. Consider account management fees and management fees on underlying portfolios.
- Plan performance. Review 1-, 3-, 5-, and 10-year performance figures when available.
If Fidelity doesn't offer a 529 plan associated with your or your beneficiary's state of residence, consider the UNIQUE College Investing Plan.
Need more help? Try our 529 college savings plan comparison tool
Does my child have to attend school in the same state that my 529 account is opened through?
No, you can invest in any state's 529 plan.
What will I need to open an account?
To open an account, you'll need a few pieces of identifying information about you and your beneficiary. For the account owner, that includes the Social Security number, date of birth, phone number, email address, and legal/mailing address.
For the beneficiary, you'll need to supply the name, date of birth, and Social Security number. If your beneficiary doesn't yet have a Social Security number assigned, many parents choose to open the account with their own name and Social Security number. Once the child's Social Security number is available, the beneficiary can be changed.
Note that a new account will be required in order to change the beneficiary.
To fund your account online you'll just need the account and routing numbers for the bank the money is coming from.
Can I make contributions through direct deposit with my employer? If I do that, will my contributions be made pre-tax?
If your employer offers direct deposit then you can add your 529 account as a destination account by using the direct deposit form from your employer. Or you can use Fidelity's form: Direct deposit/debit for a Fidelity account (PDF)
Can I have a joint owner on a 529 account at Fidelity?
No, only one person can own the account.
I have a Uniform Gifts to Minors account or Uniform Transfers to Minors (UGMA/UTMA) account. Can I transfer those assets into a custodial 529 plan account?
Yes, but you'll need to sell the assets in the UGMA/UTMA account and pay any applicable taxes, fees, and expenses. At that point, you can invest the cash in an UGMA/UTMA (custodial) 529 plan account. An UGMA/UTMA 529 plan account will be subject to the rules for both types of accounts, including applicable UGMA/UTMA state statutes. You cannot change the beneficiary of an UGMA/UTMA 529 plan account.
You may want to consult a tax professional regarding your specific tax situation.
I have an account in another state's 529 plan. Can I transfer my account to one of the Fidelity-managed 529 plans?
Yes, you can. This type of transfer is called a rollover. Under federal tax laws you are allowed to roll over a 529 plan account for each beneficiary once during any 12-month period. To roll over an account, download the form: Rollover request—529 college savings plan (PDF). Or call us at 800-544-1914.
What happens if my child doesn't attend college or I have money left in the account?
You have a few options in this case.
- You can take a nonqualified withdrawal. But if you take a nonqualified withdrawal, any earnings withdrawn are subject to federal income taxes plus a 10% federal penalty. Distributions from 529s are done on a pro-rata basis. That means that your withdrawals are made up of contributions and earnings in proportion to their levels in the account. The portion of the withdrawal that is made up of your contributions would be tax- and penalty-free but the earnings portion would be subject to taxes and the 10% penalty.
- Another option is to change the beneficiary on your 529 plan account. The new beneficiary must be an eligible family member of the original beneficiary to avoid federal income taxes and the 10% federal penalty.
A family member is a person who has one of the following relationships with the original beneficiary: (1) son or daughter; (2) stepson or stepdaughter; (3) brother, sister, stepbrother, or stepsister; (4) father, mother, or an ancestor of either; (5) stepfather or stepmother; (6) son or daughter of a brother or sister; (7) brother or sister of a father or mother; (8) son or daughter-in-law, father or mother-in-law, brother or sister-in-law; (9) spouses of the individuals listed in (1)–(8) or the spouse of the beneficiary; and (10) any first cousin.
Note that a new account will be required in order to change the beneficiary.
What if my child earns a scholarship?
You can withdraw the amount of the scholarship award from your 529 plan account without penalty; federal and state income taxes on the earnings still apply.
If I have more than one child, should I have more than one account?
Yes, it may make sense to have a 529 plan account for each child—especially if they are different ages. Here's why: Each 529 plan account can have only one beneficiary. Many investors who are saving for college choose to take advantage of the Age-based portfolio strategy for their accounts, which manages the account based on the age of the child. If you're saving for 2 children in a single account, your age-based investment strategy may not be appropriate for both children.
What are the fees and expenses?
There is no annual account fee or minimum required to open any of the Fidelity-managed 529 plan accounts.
The fees charged are incorporated into the total expense ratio. That includes the program management fee which covers the cost of trust administration services, such as recordkeeping, statements, and customer service. Mutual fund fees are also wrapped into the expense ratio. Each of the mutual funds in which the portfolios invest charges investment management fees and other expenses—the mutual fund fees vary by portfolio; the plans do not invest in any mutual fund with a sales load.
Expense ratios may vary by plan. You can find the range of expense ratios on the plan pages, in the account details section.
When will I receive a tax form?
If you've taken a distribution or transferred money between qualified education accounts, you should receive Form 1099-Q by early February of the following year to help you prepare your taxes. For example, if you took a distribution in August 2019, you should receive Form 1099-Q in late January or February 2020.
What do I do with a 1099-Q?
Use the information on Form 1099-Q to prepare your taxes for the year the distribution was taken. It is up to you to keep records and receipts of your qualified higher education expenses in case the IRS requests them.
What is the tax ID# for my state's plan?
New Hampshire: 56-2298285
Is gifting to a Fidelity 529 plan account allowed?
Gifting is allowed and encouraged. After you set up a college gifting dashboard on your account, you'll be able to share a link with your friends and family. They won't see any of your personal details but they will be able to electronically gift money to the account online. Visit the College gifting page to learn more.
How much money can I put in a 529 plan account?
According to the federal law, the most you can save in a 529 account is the expected cost of higher education—so states have set some limits based on that guideline. On an annual basis, any amounts over the annual federal gift-tax exclusion would need to be reported to the IRS as a gift and would count against your lifetime gift tax exclusion. You can "superfund" a 529 by contributing 5 years' worth of your annual federal gift tax exclusion.
To learn more about the gift tax, read Viewpoints: What to know about giving money
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The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, the Fidelity Arizona College Savings Plan and the Connecticut Higher Education Trust (CHET) 529 College Savings Plan - Direct Plan are offered by the state of New Hampshire, MEFA, the state of Delaware, and the state of Arizona with the Arizona State Treasurer's Office as the Plan Administrator and the Arizona State Board of Investment as Plan Trustee, and the Treasurer of the state of Connecticut respectively, and managed by Fidelity Investments.
If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, Arizona or Connecticut resident, you may want to consider, before investing, whether your state or the beneficiary's home state offers its residents a plan with alternate state tax advantages or other state benefits such as financial aid, scholarship funds and protection from creditors.
Units of the portfolios are municipal securities and may be subject to market volatility and fluctuation.
Please carefully consider the plan's investment objectives, risks, charges, and expenses before investing. For this and other information on any 529 college savings plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view one online. Read it carefully before you invest or send money.